A better way to fund Baltimore school construction

Since last November, Baltimore MayorStephanie Rawlings-Blakehas been trying to raise $11 million in new revenue for her Better Schools Initiative by continuing the city's existing bottle tax, increasing that tax by 150 percent, and contributing 10 percent of the projected revenue from the proposed downtown casino. In an editorial this week, the Baltimore Sun intimates that the City Council should accept this proposal, since "no viable alternative has emerged." I beg to differ.

One viable alternative, proposed months ago, would be to use a substantially larger percentage of the projected casino revenue. With an annual projection of $19 million, the mayor could simply allocate 58 percent of the casino revenue to school construction, fund her Better Schools Initiative fully, and still retain almost half of the revenue for its other use: her pending Targeted Homeowners Tax Credit. However, this alternative would force the mayor to choose between ensuring that the buildings in which our children are educated are habitable and staying on track with her promise to lower property taxes for homeowners by 9 percent over eight years. As such, an even more attractive alternative might be considered: adding a billboard tax into the revenue mix.

Currently before the City Council is a bill that would generate a minimum of $1.5 million in new revenue by charging a small annual tax on the square footage of each billboard. About 90 percent of the 1,500 billboards in Baltimore City are owned by Clear Channel Outdoor, a multibillion-dollar conglomerate headquartered in Arizona, with operations in six of the seven continents. According to its website, CCO reported global revenues of $651 million in the first quarter of 2012; revenues in the Americas alone rose $10 million, or 4 percent. Interestingly, CCO has managed 4 percent revenue growth for two straight years, despite "lingering economic challenges" and a "sluggish global economy" — which, by the way, were some of the reasons for asking the council not to pass this billboard tax two years ago.

Meanwhile, many have advocated increasing the bottle tax, saying that 5 cents a container isn't a big deal, and they're willing to sacrifice for something as important as school construction. My response is that there are going to be times when we will have no real choice but to ask all of our citizens to chip in a little more to address a pressing issue. In this case though, we can solve this problem without unnecessarily digging any deeper into the pockets of city residents, many of whom are still struggling from the "lingering economic challenges" of a "sluggish global economy."

A billboard tax can be passed on to Clear Channel's customers, which include national advertisers for whom this will be just another minor cost of doing business — one that they already pay in other major media markets, such as Philadelphia. Casino revenue comes from people who choose to gamble, by way of casino owners for whom the city's share is also part of doing business.

So, let's look at this "viable" compromise package to fund the mayor's school construction plan. We already have a 2-cent bottle tax, which provided $4.7 million in 11 months, according to the city's Department of Finance; keeping the bottle tax at its current rate would generate about $5 million a year. Add in a billboard tax, and we've got $6.5 million. Raise the contribution of casino revenue from 10 percent to 25 percent, and you've got more than $11 million in new revenue to fully fund the mayor's Better Schools Initiative. By the time the mayor needs that additional $2.6 million in casino revenue for her phased-in tax credit, it's likely that the state will have legalized table games, which would increase the city's share of gambling revenue by twice that number, maybe more.

Some will say that casino revenue isn't reliable because the casino in Baltimore hasn't been built yet; however, that didn't stop the administration from making casino revenue the centerpiece of the mayor's Targeted Homeowners Tax Credit when urging its passage by the City Council earlier this spring. More importantly, since none of these revenue sources would go into effect until fiscal 2014 anyway, we have another year to revisit the issue if future circumstances reduce this alternative's viability. But if we really need new revenue right now — as the administration insists — shouldn't we raise it from billboards and casinos first, before imposing a higher tax on ourselves?

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